Today the first large US solar conference of the year kicks off in Newport Beach, California. Between the keynotes and roundtables from the likes of Lyndon Rive, Chief Executive of SolarCity, what will be front of mind for those at Solar Power Generation?
Quality is one concern on the minds of many, it would seem. Last autumn, 24 San Diego Unified School District campuses had to remove the solar panels after premature corrosion was discovered which posed a fire-hazard. The panels had only been installed in 2005 and were meant to last more than 20 years. The manufacturer was Uni-Solar, part of the now defunct Energy Conversion Devices, while the installer, Solar Integrated Technologies, has also been wound up.
Improvements in PV power plant quality and reliability will be a hot topic at the conference.
Conrad Burke, global marketing director at DuPont Innovalight, said: “There's a race for survival in the PV industry. Costs and corners are being cut; some solar panel manufacturers are substituting lesser-known or unapproved materials into their products.
“So there are a lot of question marks in terms of long-term durability because the economics of putting solar in your house or on a major power generation plant are very much dictated by how many kilowatt hours you think you are going to get out of it over the next 20 years. If it deviates from what you thought you were going to get, you can make money, break even or lose money.”
Solar's race to the bottom price has driven this trend in the industry that seems to have begun two years ago, said Burke.
“As an industry we've undergone hyper-growth over the last five to six years,” he said. “In this race for survival the discussion for the past couple of years has been about bankability and the balance sheet of these companies and they're struggling to survive.
“There's a myth out there that warranty will cover performance risk. But the industry can ill afford a black eye right now at this critical juncture as we're heading to a $100 billion industry.”
DuPont has been making materials, all bar the silicon, for solar panels for 35 years. In 2011, it did more than $1.4 billion in sales just in PV materials such as silver paste, encapsulants and 'Tedlar'-based backsheets. But in the rush to commoditisation, quality concerns have grown.
“Materials matter, quality matters,” he said. “Commoditisation is good; but it's a risqué proposition. We do need to make sure that it's not done at the expense of quality.”
Last year, GTM Research teamed up with solar panel testing company PV Evolution Labs based in Berkeley, California, to launch a PV module ‘reliability scorecard’. It's a voluntary system that rates the best performers, but the worst will remain anonymous.
PVEL's founder Jenya Meydbray said: “Our objective with this is not to blacklist any manufacturers from the industry but rather to highlight the high performing ones.
“We hear this pretty regularly that this is mature technology; crystalline silicon has been around forever, these are very sophisticated suppliers with hundreds of megawatts of capacity, often multi-billion dollar companies.
“Underperformance looks bad, but it doesn't really happen, right? Typically this is true, but not all modules are created equal.”
Meydbray said that without industry standards of quality control, often the EPC contractor will carry the can if a project underperforms – sometimes at great expense.
Meydbray estimates that a 1% shortfall in the performance ratio of a 20MW project leads to a $50,000 annual loss in revenue or $1 million liquidated damage to the EPC contractor of 5 cents a watt for that project. A 1% difference in energy yield forecast can influence developer profitability by as much as 10%, he said.
“In the short term in the first two to five years when the EPC contractor is on the hook, if a project underperforms they're subject to liquidated damages.
Pricing dynamics of the solar industry have changed over the last three years and pushed manufacturers to cut corners, he said.
Although a median annual degradation rate of 0.5% a year is reported in economic forecasts, Meydbray points out that companies whose product is performing well are more likely to self-report their results.
But Arizona State University studies have found degradation rates of 1.7% per year loss-weighted average and 22% power loss because of mismatch.
Profit and quality don't always have to be competing dynamics, but consistency in high volume manufacturing is difficult to achieve. A 1GW factory can turn out 10,000 modules per day 365 days per year with no retest requirement after the initial product test, he said.
Meydbray wants to see an approved vendor list, oversight of production and on-site checks. Other industries such as the telecoms and semiconductor industries achieved quality with these measures, he said.
GTM projects (conservatively) predict that 180 module manufacturers will either expire or acquiesce to acquisition by 2015.
Consistent quality will probably be easier to achieve once there are fewer manufacturers but first the industry needs to get past the overcapacity GTM projects say will last beyond 2014: 70GW supply for 30GW demand.
Burke also thinks that quality is an issue that will ultimately be resolved but not without concerted effort.
“You will see more demands from downstream procurers of solar panels, ie project developers,” he said. “They will start mandating solar panel manufacturers to use higher quality materials.
“The very fact that people are having conversations about different grades of quality is bizarre. Where did you see different grades of microprocessors from the likes of Intel? You don't. There is no room in this world for poor quality electronics. And in many respects solar panels are much more critical in many other applications now.
“We're not talking about something that has been a problem for 30 years. We're talking about something that reared its ugly head in the last two years. Let's get back to the standards that we had.”